When it comes to buying a home in the U.S., Brits have largely preferred Florida. So what does their vote to divorce the European Union mean for the Sunshine State’s residential market?
For some, the answer is more business.
In the period from April 2014 through March 2015, U.K. homebuyers made 29% of their purchases of U.S. residential real estate in Florida, according to data from the National Association of Realtors. Arizona was the second largest recipient of their property investments with a distant 8%.
“It is very clear that Brexit will ultimately fare well for major metropolitan cities in the U.S.” as British buyers search for safer havens for their capital, said Jay Parker, CEO of Douglas Elliman’s Florida brokerage.
Mr. Parker foresees “a tremendous amount of people” liquidating their assets in the U.K. and placing them in the U.S., and in South Florida, in particular, thanks to the area’s supply of luxury real estate at prices that are much lower than in other international cities.
Miami offers property investors more for their money than any other major city in the U.S. According to data by real estate consultancy Knight Frank, $1 million buys 77 square meters (830 square feet) but just 65 square meters (700 square feet) in Los Angeles and 27 square meters (290 square feet) in New York.
“When you look at a Rafael Viñoly or a Renzo Piano project in Miami, you are still seeing significant discounts,” when compared to similar projects in other parts of the world, said Mr. Parker, in reference to the forthcoming luxury condominiums One River Point and Eighty Seven Park, designed by the famed Uruguayan and Italian architects, respectively.
Marc Landis, chair of the real estate practice at Phillips Nizer LLP, a New York City law firm, agrees with Parker—but to a point.
“The only question is whether the pound’s drop in value will mean that U.S. prices are too steep for all but the wealthiest U.K. residents,” he said.
More:Fewer Brits Buying Homes in the U.S., Even Before Brexit Vote
Michael Galligan, an international trusts and estate partner at Phillips Nizer, thinks British would-be buyers anywhere in the U.S. should also consider tax laws before purchasing anything, since they can be subject to “significant worldwide U.K. inheritance tax” unless they really become domiciled in the U.S. in the eyes of the British authorities.
Mr. Parker remains optimistic. He noted that a key component of purchasing activity is fear, and those who are afraid that their economy is in jeopardy would likely move their assets to markets that aren’t as vulnerable.
“This isn’t a new concept,” Mr. Parker said. “We‘ve seen it with the Brazilians, the Argentines, Venezuelans, Turks.”
British buyers are also keen on New York, where they lead international property searches, according to data by real estate listings site StreetEasy.
Krishna Rao, an economist at StreetEasy, anticipates an uptick in business in the Big Apple. “Often, a country’s economic turmoil can drum up increased interest in the value of the New York City real estate market and its perceived stability,” he said.
More:New York Luxury Real Estate Market Could Benefit from Brexit